Retailer Q | #4: Discounts

Welcome to Retailer Q, spinning 52Q’s format at top Canadian comic retailers. Comic Book Daily asks the question and our retail friends give their perspective.

As a retailer do you offer subscriber/frequent buyer discounts, such as a flat percentage off all purchases or buy X get one free cards? Why or why not?

Courtesy Ian Eckert

Christopher Butcher is the manager of The Beguiling Books & Art in Toronto, Canada. In addition, is the Co-Founder of The Toronto Comic Arts Festival, and blogs about the comics industry.

We offer a discount to our pull list subscribers, but that is very much on the concept of a “pre-order discount”. Which is to say, if you commit to purchasing books 2-3 months in advance and help take the guesswork out of our ordering, we’ll reward you with a discount. That discount only extends to books that are pre-ordered, because generally we’re opposed to discounting new product… but the idea of rewarding customers who help make our job easier has merit. 🙂

Marc Sims, owner and general manager of Big B Comics in Hamilton Ontario. Our life is comics and life is good.

We used to offer a discount to subscribers but I phased that out at the start of 2011. Now I just have grandfathered discounts to my customers who have been around since before Jan 2011 and continue to keep their accounts in good standing. Over 9 months in, I have not seen any decrease in the number of new subscribers so it’s safe to say that getting rid of the discounts has had little to no effect on my customer base. New subscriptions are actually growing at a better than normal pace, though I can largely thank the DC Relaunch for that.

I train my staff to promote the service aspect of the subscription service. We put a lot of time and effort into managing customers’ holds and ensuring 100% accuracy. We stand behind the service and have had many people switch stores to us because they are tired of missing books at their local shops. Many people expect to pay for that piece of mind (we charge nothing); to then offer a discount on top of an already free service is I think counterintuitive.

I learned the hard way, but simple math also tells me that discounts on my bread and butter product will very likely lead to a loss in revenue. I see a lot of stores offering a flat 20% discount on new comics, I guess as a way to entice customers to shop with them over competitors. I wonder though if any of them have done the math that shows you that, at a standard Diamond discount for a mildly successful store, you have to sell 57% more volume at a 20% discount to make the exact same amount of profit as you would selling at cover price. Maybe the discount allows those stores to do that increased volume. My instinct tells me probably not though and the stores would be more profitable if they sold less product at a better markup. This isn’t like we are selling something with no MSRP either. The publishers are printing right on the comics what they think they are worth. Selling for less than that only devalues your product in the consumers eyes.

At my stores the subscription service covers comics only. For graphic novels, we run a VIP Rewards program that sees every customer who signs up for our snazzy Rewards Card get back 10% of the purchase price of every graphic novel in store credit. The store credit is not accessible until the customer has purchased 10 books, so the program encourages repeat visits while providing a reasonable savings.

Jay Bardyla had one clever thought in his life, to open Happy Harbor Comics, in Edmonton Alberta. The rest of his thoughts he hopes to get an official pardon for.

We stopped discounting files years ago because, as mentioned, the loss in revenue hurts the business more than it helps. And we’ve never seen a decline in customers because of it. We too strive hard to provide the level of customer service we provide. We have custom built our own software program that allows us a great amount of versatility in providing our customers with information about what they ordered and what they have purchased. Plus our online order system is very popular and all that requires attention, which means salaries.

Further, we also use the “extra” revenue to stock a wider variety of comics, which people love, and it allows us create unique events that would never happen in the most comic markets. Earlier this year we created the first Artist-in-Residence position for a comic book store, wherein we pay someone as an employee to work on their craft in the store. They also mentor and advise and we now have more and more kids (brought by their parents) coming to the store to practice their art and get tips. In our eyes, it’s money well spent to help foster the next generation of creators!

Calum Johnston, owner of Strange Adventures comic shop chain. Trying to make the world a safer place for comix.

We offer a discount to subscribers on pre-ordered items as a way of thanking them for making our ordering a bit easier.

At Astro, we offer subscriber discounts, and have since around 1989 or so. Our structure is simple (it’s described pretty much in full on our website): Subscribers get 25% off on virtually everything (except Previews net priced SRP items). To open an account, the customer needs to order at least one ongoing monthly comic book title.

We started discounting simply to be competitive in Montreal’s (then) fiercely price sensitive market. Over the years our standard discount has dropped from 40% to the current 25%. Of course I realise that more money can be made by pricing at keystone, but I wonder if (at least in this market) the volume is there to cover whatever would be lost in overwhelmingly price-sensitive dropouts. We do have a few cancellations whenever the discount changes, and although they don’t have that much impact I’m always very hesitant to muck with a proven, popular formula.

I’ve seen all the anti-discounting arguments over the years, and while there’s always that rock solid kernel of truth: “You make more money buying for a dollar and selling for two than you do buying for one, selling for one-fifty”, there’s also always the argument put forth by some of the truly moronic “experts: “Discounting is a guaranteed way to ensure financial failure.” Tell that to Wal-Mart.

I’d rather sell 10,000 $1 units a month at 50% markup (that’s what a 25% discount is), than 3,000 at 100%. Good old Volume Volume Volume!

And that old saw “Price, quality, speed – choose one”? Well, people like Kirby could turn out quality and do it quickly. So could many, many other artists (Gil Kane and Sergio Aragones come immediately to mind). I’m not offering a special service to my subscribers. I’m offering a product (a comic subscription) at a reasonable price. The price on the cover isn’t the Word of God – it’s what a marketing director thinks the market will bear. I charge what is, to me, a reasonable markup based of cost, but in this environment, that’s generally expressed as a discount off SRP.

We do provide a discount and have since the beginning. I suppose it’s a pretty old-school comic store standard, but I can’t imagine my store any other way! We recently re-vamped the membership programme. We used to have separate memberships for comics and games, but now we just have a single membership that provides 15% off new comics and graphic novels, 25% off back issues, 10% off board games and merchandise, and which comes with a free Previews and bags and boards. This costs $30 per year, all of which goes to Plan Canada to support children’s education in Colombia. After 5 consecutive memberships, customers become lifetime members (new customers also have the option of purchasing 5 memberships to become a lifetime member instantly).

Members also receive a holiday card each December, giving them an extra 10% off a single purchase in the month as a way to thank them for their continued business.

The first reason we offer a discount is to entice customers to purchase more items, the rationale being if they’re saving in one area, they may be more likely to pick up something extra. Often customers come in thinking they’re going to spend more, and when the total comes up lower than expected, they’ll add something else from the shelf. The second reason is to keep customers shopping here, rather than going online or taking a trip to another city for their books.

Of course, discounting makes more sense if you keep the membership fee to defray some of the costs, but I really wanted to do something meaningful. It’s always been my desire to have the store generate some money that I can give back to society. Since we started the donation programme in August of last year, we’ve raised over $4500.

We stopped offering discounts in the late 1990’s and have never looked back. I think discounting has become the standard in some areas because everyone has always done it and no one has tried to stop. We did grandfather discounts to existing subscribers at the time but currently over 90% of our customers pay full price. We have found that, despite what they might say, price isn’t nearly as high on most people’s list of priorities as service and selection.

The “extra” revenue we receive by not discounting allows us to do a number of other things our customers find beneficial including stocking the store wider and deeper on a variety of product lines, having multiple checkouts and extra staff on hand for busier times like Wednesdays and weekends, holding signings and special events, and using a POS system (MOBY) (that’s point of sale for those not in retail and not the more common definition – Scott) to ensure accuracy with subscriptions.

Each market has its own vagaries and I’m sure the systems my colleagues have described work well for them but for us, the pre-order model doesn’t work very well. I find that the vast majority of our customers don’t want to shop by catalog or online, they want to browse through the shelves and hold the books in their hands before making a purchase. I think the recent frenzy surrounding DC’s New 52 illustrates the huge disconnect there often is between what a customer think’s he might want two months in advance and what he’ll buy once he can actually see the books.

We tried discounting many years ago, when the industry was healthier, and then we came to our senses. Too many extra copies to sell to reach the same target. We moved to a subscription model but that was too much paperwork. Finally, we settled on a permanent deposit system. We refer to it as “like last month’s rent”. People no longer simply “vanish” when they’ve got money on the line, which takes care of what they have remaining in the system.

Customers who do get discounts are the ones who buy vintage comics, often and regularly, and as fast as I can process them. These are my best “creme de la creme” collectors. They come in almost weekly (in fact, they inform me when they’re not going to be in), they buy a lot of new stuff (they’re all about lists, new and old), they appreciate my efforts, and they spend, spend, spend.

I appreciate their business and their loyalty and I give them good prices in return. The more they spend, the better the deal. The old adage is true: 80% of my business comes from these 20% of my customers. I track their purchases and I realize how valuable they are to my bottom line. So I show them that appreciation. I consider it a perfect symbiotic relationship.

Whenever a newbie walks in and asks about our pull and hold, I’m always ready to pounce when I hear “discount”. “Wait, you want me to do a lot more work for you, and you want to pay me less to do it? I should be charging you more but I don’t.” Thanks, but no thanks.

At Heroes, we do a regular pull service with some irregular discount incentives. The more monthly comics a customer collects with us, the higher a discount they get: 2 or more comics a month gets %15 off, 7 or more comics a month gets %20 off, and 14 or more comics a month gets %23 off. Basically, most of our bigger customers top out at %23 off. Our comic discounts count towards any comic book purchase in the store: new comics, back issues, and graphic novels. If it is a comic, you can save money on it if you are one of our monthly comic subscribers. Heroes has had this discount structured subscription service for over 20 years and it has served us and our customers well.

That being said, we are open to adapt as the market changes. Over the last decade, the growth of digital comics and graphic novels has created new types of readers. Many readers now solely read trade paperbacks and graphic novels. We have thought about creating a frequent buyer card of some sort to reward our customers who only buy trades, but have opted instead to just have a large selection of heavily discounted graphic novels. Things like selling the first few volumes of Walking Dead for $5 to hook new readers to a long running series or turn them on to a new series.

The one downfall I have found to subscription services over the years is what to do when a subscriber decides not to pick up their books. After holding books for a member for a few months and a few phone calls to their house, if they still do not come in to pick up their books, we usually just return their books to the shelf and sell them to somebody else. Years past, we did try legal action against some of our bigger defaults, but this was never worth the effort. We don’t want to try and force someone to buy comics that they no longer want to buy or simply cannot afford. I have noticed in the past that some defaulted subscribers seem to be afraid to come back to the store as they think we are angry at them or that we have continued to pull and hold books for them and expect them to pay for them. This couldn’t be further from the truth; none of this would be good business. We do not want to lose these old customers and would be happy to have them continue shopping at Heroes. We might even be up for signing them up for a membership again.

No matter what, we definitely want to reward our regular and loyal customers as they are our bread and butter.